Tydings v. Greenfield, Stein & Senior, Llp

• Decision Date: 16 October 2008
• Docket Number: No. 154,154
• Citation: 11 N.Y.3d 195,897 N.E.2d 1044
• Parties: Frieda TYDINGS, Respondent, v. GREENFIELD, STEIN & SENIOR, LLP, Appellant.
• Court: New York Court of Appeals Court of Appeals

897 N.E.2d 1044

11 N.Y.3d 195

Frieda TYDINGS, Respondent, v. GREENFIELD, STEIN & SENIOR, LLP, Appellant.

No. 154

Court of Appeals of New York.

October 16, 2008.

Kavanagh Maloney & Osnato LLP, New York City (James J. Maloney, David F. Bayne and Steven M. Cordero of counsel), for appellant.

Proskauer Rose LLP, New York City (Bertrand C. Sellier and Andy S. Oh of counsel), and Peter M. Levine, for respondent.

OPINION OF THE COURT

SMITH, J.

We hold that collateral estoppel does not prevent relitigation of a ruling that was an alternative basis for a trial-level decision, where an appellate court affirmed the decision without addressing that ruling. We also hold that, when a trustee resigns, the statute of limitations governing an action to compel her to account runs from the date the trusteeship is turned over to a successor trustee.

I

Frieda Tydings brings this legal malpractice action against the law firm of Greenfield, Stein & Senior, LLP (GSS), alleging that GSS's negligence in defending a proceeding to compel an accounting caused her damage.

Tydings served for several years as trustee of a grantor trust created by Tydings's relative, Ricki Singer. She resigned on January 1, 1997, and was succeeded as trustee by Singer's brother on that date. For more than six years after that, Tydings rendered no accounting. On August 20, 2003, Singer filed a petition in Surrogate's Court, seeking a compulsory accounting from both Tydings and Tydings's successor as trustee.

Tydings retained GSS to represent her. The law firm filed a notice of appearance but did not answer the petition or assert, in any form, a statute of limitations defense. The Surrogate ordered Tydings to provide an accounting, which she did. Singer objected to the accounting and Tydings, now represented by new counsel, moved to dismiss the objections, relying on the six-year statute of limitations (CPLR 213[1]). The Surrogate denied Tydings's motion on two alternative grounds: that Tydings had failed to show the statute expired before the proceeding to compel an accounting was begun, and that the statute of limitations defense was unavailable to Tydings because she asserted it too late (Matter of Singer, 12 Misc.3d 621, 624-626, 818 N.Y.S.2d 417 [Sur. Ct., N.Y. County 2006]). The Appellate Division affirmed the Surrogate's order on the second ground only, holding that Tydings "waived her statute of limitations defense by failing to raise it in response to the grantor's petition to compel an accounting" (Matter of Singer, 30 A.D.3d 211, 817 N.Y.S.2d 241 [2006]).

Tydings then began this action against GSS. She claims that the accounting proceeding against her would have been dismissed if GSS's negligence had not caused her to waive her statute of limitations defense. Of course, this could be true only if the defense had merit. GSS moved to dismiss, contending that Tydings was bound by the Surrogate's alternative holding, in the previous proceeding, rejecting her statute of limitations argument. Supreme Court granted the motion (14 Misc.3d 1233[A], 836 N.Y.S.2d 495), but the Appellate Division reversed, holding that the Surrogate's ruling on the statute of limitations issue should not be given collateral estoppel effect (Tydings v. Greenfield, Stein & Senior, LLP, 43 A.D.3d 680, 843 N.Y.S.2d 538 [1st Dept. 2007]). The Appellate Division also discussed the merits of that issue: it rejected the Surrogate's reasoning and said that the statute of limitations began to run upon Tydings's "resignation as trustee and surrender of the trusteeship to a successor" (id. at 683, 843 N.Y.S.2d 538 n). The Appellate Division granted leave to appeal to us on a certified question, and we now affirm.

II

Collateral estoppel bars relitigation of an issue "which has necessarily been decided in [a] prior action and is decisive of the present action" if there has been "a full and fair opportunity to contest the decision now said to be controlling" (Buechel v. Bain, 97 N.Y.2d 295, 303-304, 740 N.Y.S.2d 252, 766 N.E.2d 914 [2001]). When a decision rests on two independent grounds, either of which could support it alone, the general rule, according to the Restatement (Second) of Judgments, is that neither holding is binding for collateral estoppel purposes (Restatement [Second] of Judgments § 27, Comment i). In Malloy v. Trombley (50 N.Y.2d 46, 427 N.Y.S.2d 969, 405 N.E.2d 213 [1980]), however, we departed from the Restatement rule.

Malloy and Trombley were both injured when Malloy's car ran into Trombley's on a highway. Both brought claims against the State in the Court of Claims. The Court of Claims tried the two cases jointly and dismissed them both, finding in the alternative that the State was not negligent and that both Malloy and Trombley were contributorily negligent; because the accident occurred before the effective date of the comparative negligence law, contributory negligence was a complete bar to recovery. No party appealed from the Court of Claims decision.

Malloy also brought a negligence action against Trombley. We affirmed the dismissal of that action, holding it was barred by the Court of Claims' finding that Malloy was guilty of contributory negligence. We took note of "the recognized principle that conclusive effect is not to be accorded a finding which is but an alternative ground for the prior court's decision," but decided not to "apply that principle rigidly" (50 N.Y.2d at 49, 427 N.Y.S.2d 969, 405 N.E.2d 213). We based our decision on the circumstances present in Malloy, and said we did not intend "to enunciate any broad rule" (id. at 52, 427 N.Y.S.2d 969, 405 N.E.2d 213). Judge Fuchsberg, whose vote was necessary to the outcome, wrote a concurring opinion in which he stressed that the result was tied to "the particular facts and circumstances in this case" (id. at 53, 427 N.Y.S.2d 969, 405 N.E.2d 213 [Fuchsberg, J., concurring]). He described those circumstances in detail, including "the unhurried and painstaking care" with which the Court of Claims trial had been conducted (id.) and the fact that, in his view, the Court of Claims' finding on the contributory negligence issue was "[p]ragmatically ... not open to any serious dispute" (id. at 54, 427 N.Y.S.2d 969, 405 N.E.2d 213).

It is obvious both from the 4-3 vote and from the opinions of the majority judges that Malloy was a close case. Our later decision in O'Connor v. G & R Packing Co. (53 N.Y.2d 278, 280, 440 N.Y.S.2d 920, 423 N.E.2d 397 [1981]), declining to apply collateral estoppel to an alternative ground for decision when it was not "clear that the prior determination squarely addressed and specifically decided the issue," shows that, while we have not abandoned Malloy, we have not been willing to extend it. But GSS asks us to extend it here, by applying collateral estoppel where the losing party in the earlier case tried, unsuccessfully, to get appellate review of the alternative holding now being invoked against her. We will not take this further step.

This case is different from Malloy, in which the losing party in the first lawsuit could have appealed but did not. Tydings did appeal the first decision against her, and challenged the Surrogate's statute of limitations holding, but was unable to get an appellate ruling on the issue. It is significantly less clear here than it was in Malloy that the losing party had a full and fair chance to overturn the earlier decision.

GSS cites no case from any jurisdiction in which an alternative holding has been held binding for collateral estoppel purposes after an appellate court affirmed the earlier judgment without considering that holding. Several decisions by the Appellate Division (Sabbatini v. Galati, 43 A.D.3d 1136, 1139, 842 N.Y.S.2d 539 [2d Dept.2007]; Vincent v. Thompson, 50 A.D.2d 211, 213, 377 N.Y.S.2d 118 [2d Dept.1975]) and by federal courts (Gelb v. Royal Globe Ins. Co., 798 F.2d 38, 45 [2d Cir.1986]); Hannahville Indian Community v. United States, 180 Ct.Cl. 477, 485 [1967]) adopt the opposite rule. As the Second Circuit put it in Gelb: "[I]f an appeal is taken and the appellate court affirms on one ground and disregards the other, there is no collateral estoppel as to the mi-reviewed ground" (798 F.2d at 45). Gelb was stating federal law, but we hold today that New York law is the same.

For this reason, the Surrogate's decision on the statute of limitations issue does not bind Tydings in the present lawsuit. Tydings argues that the same is true for another reason also — that the Surrogate's decision was on a pure question of law, to which the doctrine of collateral estoppel does not apply (American Home Assur. Co. v. International Ins. Co., 90 N.Y.2d 433, 440, 661 N.Y.S.2d 584, 684 N.E.2d 14 [1997]). We have no need to consider this argument.

III

Even though the Surrogate's decision is not binding as a matter of collateral estoppel, GSS would still be entitled to dismissal of this case if the Surrogate had been correct in holding that the statute of limitations defense, which GSS failed to plead, lacked merit. We conclude, however, that the statute of limitations defense was a good one, and would have...